Is Bitcoin Legal in the UK? - 2025 Update
Quick Answer: Is Bitcoin Legal in the UK?
Yes, Bitcoin is legal in the UK. You can buy, sell, and hold it without breaking the law. However, it isn’t legal tender and is not covered by financial protections like FSCS. Tax and regulatory obligations still apply for individuals and businesses.
Is It Legal to Buy and Sell Bitcoin in the UK?
What Does the FCA Say About Bitcoin?
The Financial Conduct Authority (FCA) does not consider Bitcoin legal tender or a regulated financial product. It permits trading but issues frequent warnings about risks. Firms offering crypto services must register with the FCA for anti-money laundering (AML) and counter-terrorist financing (CTF) compliance.
Are Bitcoin Exchanges Regulated in the UK?
Yes, but only in relation to AML/CTF regulations. Bitcoin exchanges operating in the UK must register with the FCA. This doesn’t mean the FCA endorses cryptoassets — it just ensures businesses follow specific rules to reduce financial crime risks and meet transparency standards.
Can UK Citizens Legally Own Bitcoin?
UK residents can legally buy, sell, and own Bitcoin. There are no laws banning personal crypto ownership. You’re free to hold it as an investment, store it in a wallet, or trade it via FCA-registered platforms — provided you report any taxable activity.
Is It Legal to Pay for Goods with Bitcoin?
Yes, you can pay with Bitcoin in the UK, but it’s not legal tender. Merchants may choose to accept it, but they’re not required to. Any crypto-based payments may also have tax implications depending on the nature of the transaction.
Legal Bitcoin Activities in the UK
| Activity | Legal Status | Notes |
|---|---|---|
| Buying Bitcoin | Legal | Must use FCA-registered exchanges |
| Selling Bitcoin | Legal | Taxable if gains exceed CGT threshold |
| Holding Bitcoin | Legal | No restrictions, but not FSCS-protected |
| Paying with Bitcoin | Legal | Merchants can accept it voluntarily |
| Mining Bitcoin | Legal | Taxable income; electricity use must comply with UK laws |
Do You Have to Pay Tax on Bitcoin in the UK?
How Does HMRC Treat Bitcoin?
HMRC classifies Bitcoin as a cryptoasset, not a currency. It’s treated similarly to property for tax purposes. That means individuals may owe Capital Gains Tax (CGT) on profits, and businesses must declare crypto income as part of their overall financial reporting.
Do You Pay Capital Gains Tax on Bitcoin Profits?
Yes — if your gains exceed the annual CGT allowance (£3,000 for 2025/26), you’ll owe tax. Profits from selling, swapping, or gifting Bitcoin (except to a spouse) are taxable. CGT rates depend on your income bracket, typically 10% or 20% for individuals.
Are There Tax Rules for Businesses Accepting Bitcoin?
Yes. Businesses must record Bitcoin transactions in GBP and treat them as income. Payments made in Bitcoin are subject to standard corporation tax rules. VAT may also apply depending on the transaction type. Accurate records and conversion rates must be kept.
Key UK Crypto Tax Rules (2025)
| Action | Tax Type | Notes |
|---|---|---|
| Selling Bitcoin | Capital Gains Tax | CGT applies if gains exceed £3,000/year |
| Gifting (non-spouse) | Capital Gains Tax | Taxed as a disposal |
| Mining Bitcoin | Income Tax | Taxed as earnings (also subject to NICs if applicable) |
| Getting paid in Bitcoin | Income Tax | Must be declared in GBP value at time of receipt |
| Using BTC for purchases | Capital Gains Tax | Treated as a disposal — may trigger CGT |
Is Bitcoin Safe and Protected by UK Law?
Are Crypto Investments Protected by the FSCS?
No. Bitcoin investments are not protected by the Financial Services Compensation Scheme (FSCS). If a platform fails or funds are lost due to fraud or hacking, you cannot claim compensation through FSCS as you would with traditional banks or investment firms.
What Happens if a Crypto Exchange Goes Bust?
If a crypto platform collapses, users may lose access to funds — especially if it’s unregulated. There’s no guaranteed reimbursement. This highlights the importance of using FCA-registered exchanges and withdrawing assets to private wallets for added security and self-custody.
How Can You Protect Your Bitcoin?
- Use non-custodial or hardware wallets
- Enable two-factor authentication
- Keep your recovery phrase offline
- Avoid public Wi-Fi for wallet access
- Use FCA-registered platforms
- Stay alert to phishing and scams
Final Thoughts – Is Bitcoin Legal and Safe in the UK?
Bitcoin is legal to buy, sell, and hold in the UK, but it’s not classed as legal tender or a regulated investment. There’s no FSCS protection. Stick with FCA-registered platforms, understand your tax duties, and use secure wallets to protect your assets.
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FAQs
Is Bitcoin banned in the UK?
No. Bitcoin is legal in the UK. You can own, buy, and sell it. However, it’s not considered legal tender and is not backed by any government or central bank.
Can I get in trouble for using Bitcoin?
Not if you follow the rules. Buying and using Bitcoin is legal, but using it for illegal purposes (e.g. money laundering or fraud) is criminal. Always report your gains and use regulated services.
Do I need to report Bitcoin to HMRC?
Yes — if you make gains above the CGT threshold, you must report them on your Self Assessment. You should also keep records of transactions, holdings, and values in GBP.
Is Bitcoin a currency in the UK?
No. Bitcoin is classed as a cryptoasset, not a currency. It can be used for payments where accepted, but it isn’t legal tender or recognised as official money.
Is it legal to mine Bitcoin in the UK?
Yes. Mining Bitcoin is legal in the UK, provided you’re not violating electricity regulations or using it for illicit purposes. Any income or profits from mining may be taxable.
